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The Indian stock market experienced a significant drop on 6th September 2024, raising concerns among investors and traders alike. Several key factors contributed to the market’s poor performance, including global economic uncertainties, rising crude oil prices, and the weakening Indian rupee. Understanding these factors provides clarity on why this downturn occurred and what investors can expect in the coming days.

1. Global Economic Concerns

One of the primary reasons for the stock market decline on 6th September 2024 was the prevailing uncertainty in global markets. Major economies, including the U.S. and Europe, were grappling with inflationary pressures and central bank actions aimed at controlling interest rates. The U.S. Federal Reserve’s decision to maintain high interest rates to combat inflation created a ripple effect across global markets. This monetary policy led to a cautious stance among foreign institutional investors (FIIs), causing a sell-off in emerging markets, including India.

2. Rising Crude Oil Prices

Another significant factor that impacted the Indian market was the surge in global crude oil prices. As one of the largest importers of crude oil, India is highly sensitive to fluctuations in oil prices. On 6th September 2024, Brent crude oil crossed $87 per barrel due to supply cuts from major oil-producing nations, including Saudi Arabia and Russia. The rise in oil prices exacerbated inflation concerns and increased India’s trade deficit, directly impacting the stock market. Sectors like aviation, paint, and automobiles, which are heavily reliant on oil, witnessed steep declines.

3. Depreciating Indian Rupee

The weakening of the Indian rupee against the US dollar also played a crucial role in the stock market’s fall. On 6th September 2024, the rupee hit a low of 84 per dollar, triggering panic among investors. A depreciating rupee increases the cost of imports and affects corporate earnings, especially for companies that rely on foreign goods and services. This currency weakness further led to a sell-off in stocks with high exposure to foreign currencies.

4. Foreign Institutional Investor (FII) Outflows

FIIs play a major role in the Indian stock market, and their decisions can significantly affect market movements. On 6th September 2024, FIIs pulled out substantial funds from the Indian market due to global uncertainties, shifting their focus to safer assets like U.S. Treasury bonds. This withdrawal of foreign funds led to a sharp decline in equity prices, particularly in blue-chip stocks.

5. Weak Domestic Sentiment

Domestically, the market sentiment remained weak due to lacklustre quarterly earnings reports from key companies. Additionally, concerns over potential government policies aimed at tightening regulations on certain sectors, such as telecommunications and real estate, added to investor apprehension. The ongoing geopolitical tensions also fueled concerns about future economic growth, leading to broad-based selling in the market.

6. Sectoral Impact

The market downturn affected various sectors, with banking, technology, and consumer goods experiencing significant losses. The banking sector, in particular, was hit hard due to rising bond yields and concerns over non-performing assets (NPAs). Technology stocks, which are highly sensitive to global demand, saw selling pressure due to uncertainties in the international market.

Conclusion

The fall of the Indian stock market on 6th September 2024 can be attributed to a combination of global and domestic factors. Rising crude oil prices, a weakening rupee, global economic concerns, and FII outflows collectively contributed to the market’s decline. Investors are advised to remain cautious and focus on fundamentally strong stocks to navigate these uncertain times. As the global and domestic economic landscapes evolve, monitoring key indicators will be essential for predicting future market trends.